At this point, it is worthwhile to recall the five diversification regimes: those countries with little diversification; countries that started but got stuck in the diversification process; those with deepened diversification; backsliders in diversification; and the conflict and post-conflict countries. This report suggests that belonging to a particular regime has more to do with policy and institutional factors at the country level. Consequently, there are different determinants when the discussion is brought to the country level (see table A5.2 for correlation results).
The results for selected African countries represent the different diversification regimes, namely, for Tunisia, Kenya, Nigeria, Burkina Faso and Sudan. Tunisia, representing a regime with deepened diversification, shows significant results in relation to investment, inflation and exchange rate while it is negatively and significantly related with income per capita, trade and country risk. Tunisia follows the more general African results with respect to the influence of per capita income, inflation, exchange rate and country risk on diversification. Nonetheless, two factors, level of investment and openness, have opposite directions in relationships from the general continental evidence.
Kenya is an example of a country where diversification took off but was not able to go very far. In this case, per capita income was a strong determinant of diversification.
The exchange rate was also significant to diversification results in the country.
This is also consistent with the continental results. Like Tunisia, Kenya’s openness tended to deepen diversification rather than restrain it. Investment, growth in manufacturing value added, inflation and country risk have not played significant roles in the diversification outcomes for Kenya.
Nigeria is an example of an African country where oil dominates exports. Hence, Nigeria is a highly specialized economy in terms of export products. Nigeria’s oil exports account for 98 per cent of its total export value. These results are inconsistent with the continental results, especially with regard to the influence of investment, income, trade, exchange rate and country risk. However, the diversification question is dominated by the oil factor in Nigeria’s export products.
In the case of Burkina Faso and Sudan, countries representing the regimes of limited diversification and of conflict, respectively, the relationships shown by the correlations do not indicate any plausible economic inferences and the data plots have no clear patterns. In both cases, no clear relationship between the different economic variables and diversification allowed reasonable conclusions to be drawn regarding countries in these regimes.
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